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Welfare benefits increasingly important to struggling debtors

26 March, 2013

Welfare benefits have become increasingly important in helping those struggling with debt keep up with day-to-day living expenses according to a leading debt charity. StepChange Debt Charity has seen a rise in income from benefits among those seeking its help at the same time as a decline in income from wages. It is now very concerned that reductions in welfare benefits will have serious consequences for those struggling with debt.

Over half (55.7 percent) of all of those seeking help from the charity last year received one of the following benefits: Child Benefit, Child Tax Credit, Disability Living Allowance, Employment and Support Allowance (ESA), Income Support, Jobseeker’s Allowance (JSA) or Working Tax Credit. Since 2009, income from benefits and tax credits has increased from £387 to £493.

The importance of these benefits is underlined by those claiming ESA and JSA. They are in the worst financial position of all StepChange Debt Charity clients, with significant monthly budget deficits. The average budget deficit of a client in receipt of ESA is £15 a month less than they need to meet day-to-day expenses, this is £150 a month less for clients receiving JSA.

Unclaimed benefits

The charity is concerned about people not claiming the welfare benefits that they are entitled to. For people with an unclaimed benefit entitlement, the average uplift in income after a check in 2012 was £80 per month. In response, the charity is now checking if clients are entitled to more benefits as part of its standard advice process.

The charity is urging anyone struggling with debt to seek help and check how any changes to welfare benefits will affect them.

Commenting on the findings, Delroy Corinaldi, director of external affairs, said: “The welfare benefit changes are going to have a serious impact on many financially vulnerable households.

“The key is not to panic, but to find out how the welfare benefit changes will affect them and seek free debt advice if they are concerned about how they will keep up with their debt repayments.”